Member Article

Private sector wages likely to rise faster than public sector

Private sector wages are likely to rise faster than public sector wages in the next four years, according to a report from the Institute for Fiscal Studies.

The pay gap between public and private sector workers had returned to pre-financial crisis levels, said the independent research institute.

At the peak of the financial crisis between 2008 and 2010, private sector pay fell faster in real terms than public sector pay. However, since 2010, public sector pay has fallen.

A large majority of public sector workers continue to save into a defined benefit pension, while only 12% of private sector staff have pensions of this kind.

Women in the public sector get paid 8% more than private sector staff. For men, there is little difference in wages.

The Office of Budget Responsibility predicts that wages will grow faster in the private sector over the next four years.

The report said: “If correct, this implies that the gap between public and private sector pay levels will fall back to levels last seen in the late 1990s and early 2000s, when there were recruitment and retention problems in parts of the public sector.”

Frances O’Grady, general secretary of the TUC, told the BBC: “The pay squeeze looks set to go on and on, which will not only make public sector workers suffer further years of cuts in their living standards, but also hit the quality of the services that bind our society together.”

This was posted in Bdaily's Members' News section by Ellen Forster .